Charity plans to wipe $ 278 million in unpaid medical debts from Ballad Health patients

A national charity will purchase $ 278 million in medical debt directly from the Appalachian region’s health system, Ballad Health, helping provide financial assistance to 82,000 patients.

Ballad Health announced on Tuesday that it has struck a deal with RIP Medical Debt, a national nonprofit that buys and removes medical debt, to sell and eliminate millions of unpaid health care expenses.

The agreement will affect approximately 82,000 people who had previously received community health system services from 21 hospitals. The provider noted that almost all of these people met their charitable care policy threshold, but had only recently qualified due to recent updates or had not sought support on their own.

To reach them, RIP will send letters in yellow envelopes to people now eligible for debt elimination during the week of June 28.

“We have examined over one hundred thousand people in our service area for food and housing insecurity, exposure to domestic violence and other health-related social needs, and we have found, time and time again, many services exist to support these individuals and families, but as a system and community we did not previously have a proper connection with them, ”said Anthony Keck, Head of Population Health at Ballad Health, in a press release.

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“By removing this burden of old debt, we hope to better engage with our patients, so that they have access to care and other services when they need it without fear of unmanageable expenses,” a- he declared.

The deal only applies to medical debts from non-government payers, the groups wrote, which means RIP will not forgive patients’ Medicare or Medicaid debts, and patients with multiple unpaid accounts with Ballad Health can still be responsible for other payments.

Founded in 2014 by former debt collectors, RIP uses donated funds to purchase medical debts from other buyers and collection agencies. The nonprofit says it is typically able to write off $ 100 in debt for every dollar spent.

To date, RIP has said it has written off more than $ 4.5 billion in medical debts belonging to more than 2.7 million families with financial burdens, sometimes through charitable campaigns focused on specific geographic regions and other times through one-time donations of up to $ 250 million. Over the years, he has benefited from publicity and major donations from HBO’s “Last Week Tonight” and philanthropist MacKenzie Scott.

RIP and Ballad said they started discussing the possibility of a direct deal in 2020 and have since developed legal and technical considerations. It should be noted that the partners underlined an advisory opinion of July 2020 the Office of the Inspector General of the Department of Health and Social Services which, under certain conditions, allows suppliers to sell or donate debts to the charity for abolition.

The partners suggested that their recently announced deal could serve as a “test case” for RIP to make similar deals with other health systems across the country.

“Working directly with healthcare providers allows us to cut heavy medical debts earlier in their life cycle and we encourage other community-minded physicians and hospitals to explore a partnership with us so that together we can continue to ease the debt burden on individuals and families, so they can make a fresh start, ”said Allison Sesso, executive director of RIP Medical Debt, in a statement.

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A representative for RIP told Fierce Healthcare that the company was unable to disclose the exact price it paid for the debt, but the pricing process is generally similar to that of a traditional debt purchase – debts that are only one or two years old run the charity about 1% to 1.25% of the debt’s value, while those over 10 years old could be as low as 0.03% .

Ballad’s debt collection was a mix of different ages, but “in this case we bought for pennies on the dollar,” the rep said.

Suppliers have a lot to gain from working directly with RIP, the representative said. While most of the charity’s purchases are normally written off by a hospital as bad debt and likely wouldn’t affect their credit rating, letting the debt hang over patients’ heads can deter them from paying off. seek future care and worsen results.

“We know that medical debt is a social determinant of health. So RIP is keen to work with all vendors to do essentially the same thing we did with Ballad – see if there are any qualifying accounts that the entity has, then buy them at a competitive market rate … or do them make a donation ”, the representative mentioned. “It’s a win-win solution that clears bad debt and also allows a hospital to show the community that it is interested in helping people. “

Ballad Health was formed in 2018 by the merger of Mountain States Health Alliance and Wellmont Health System and at the time it had agreed to terms with state regulators to focus additional investment funds on community health efforts.

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Recently, these have included “increasing our eligibility for full charity from 200% to 225% of the federal poverty line, reducing fees for emergency care services by 17%, and increasing charges for emergency care services by 17%. 85% self-payment fee discounts and the implementation of onerous administrative requirements for people to qualify for charitable care, ”CFO Lynn Krutak said in a statement.

With below-average per capita incomes and a higher disease burden distributed across its rural patient population, “it made sense that we looked at the RIP model to see if we could scale up these efforts,” Krutak said.

Hospitals and systems have come under increased scrutiny in their patient collection practices.

A survey last month found that community health systems have filed more than 19,000 lawsuits against patients for allegedly unpaid medical bills since March 2020. More recently, a Johns Hopkins and Axios report found that more than a quarter of the highest-earning hospitals in the United States sued their patients for unpaid medical bills from 2018 to 2020. Ballad himself was sounded by the press in 2019 for bringing similar cases against his patients.

On the other hand, the University of Virginia Health System announced in April that it would cancel a backlog of tens of thousands of cases against patients linked to its collection policies. The ruling affects all liens and judgments filed against households making less than 400% of federal poverty guidelines, he said, although most families who had already returned money to the system would not see not their payments refunded.

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